External and Internal Factors Influence to the Return on Equity and Risk Investment in Jakarta Islamic Index (JII)

Abstract

Objective - This study aims to analyze the direct influence of external factors (inflation, foreign exchange rates, interest rate of Bank Indonesia) and internal (capital structure, liquidity) on Return On Equity (ROE) in companies that went public in Jakarta Islamic Index, analyze the indirect influence of external and internal factors on the risk of investing in companies that go public in Jakarta Islamic Index, analyze the effect of ROE on the risk investment in companies that go public in Jakarta Islamic Index. Methodology/Technique - The sample used 10 companies using purposive sampling. Analysis tools using path analysis. Findings – Results showed inflation and exchange rates (foreign exchange rates / USD) no significant effect on ROE and Investment Risk. BI rate has no effect on ROE but significant effect on the risk of investment. Capital structure and liquidity significantly influence the ROE but had no effect on the risk of investment. ROE has no effect on the risk of investment. Novelty - Results of research it pays advisable for investors and prospective investors pay attention to internal factors (capital structure, liquidity and other fundamental factors) companies due to internal factors will affect the profitability of Integration. Type of Paper - Empirical Keywords: Inflation; Exchange Rates; Interest Rates; Capital Structure; Liquidity; ROE; Investment Risk. s JEL Classification: L16, M21, M41.